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President Trump needs to move from politics to economy, infrastructure: Paul Heise

Posted
Wednesday, January 10, 2018 9:18 am

Paul Heise

Donald Trump has been with us as president for a year. That is enough time for us to take the measure of the man we put in charge of our politics.

Up to this point it has been all politics and more politics! Who is going to govern and how? Trump concentrated on politics, and there was no time for economics.

Donald Trump has a genius for focusing political attention on himself. That might work sometimes in politics but not in economics. It’s going to be different now. The metric used to measure the political “success” of the Trump administration, seems to be the number of “big deal” laws that get passed.

Until several weeks ago the only such was the appointment to the Supreme Court of Neil Gorsuch, an Antonin Scalia type conservative. That was it and that was not much, considering that the Democrats did not oppose the appointment. It was certainly not tremendous enough to satisfy the ego needs of the president. After the debacle of the failed attempt to repeal the Affordable Care Act (Obamacare), Trump needed something political and big.

The president constantly promised us a “big beautiful tax cut.” We got a Tax Reform Bill. We did not get a big beautiful tax cut. We got politics, not economics.

After the electorate and the politicians experienced the up-again down-again sausage making that is legislation writing, the Republican leadership agreed that they were going to agree. I am not sure they ever did honestly pass completed legislation. The administration passed the bill on the closest of possible partisan votes. It was a bill whose summary says it all — a “review of the Section-by-Section Summary” shows that it does not contain the words jobs or employment. We got a Tax Reform Bill we did not get a big beautiful tax cut. We got neither politics, nor economics.

The Congress spent the entire year first fiddling with Obamacare and then fiddling spectacularly with the Tax Reform Act. This tax cut was a major accomplishment of the Republican Congress.

The Trump administration got a tax cut not because it was good economics and needed but because the Republicans had to have something to show for their year-long control. They had to have it to show something for their donor class.

The general idea was to cut the loopholes and fold them into the general schedules. For some reason reducing the number of tax brackets from 7 to 4 was considered a serious need. Aside from things like that, the year of overpowering political attention was a bust.

They concentrated on politics without settling anything.

The Trump administration is still stuck on politics. For instance, we have made no decision in regard to the amount of surveillance, foreign or domestic, we will permit our government to use against us or our enemies. Are we ever going to simplify our tax schedules? Will our spending ever be determined in light of our needs? Trump does seem to be interested in infrastructure. I would, however, fear that he is doing this to spread the spending among his cronies and swamp dwellers.

Whether you like it or not (I don’t), much of the political goals of the Trump administration are being successfully implemented by people like Scott Pruett in the EPA and Betsy DeVos in education. Deregulation is rampantly endangering the productivity, safety and health of the population which is also being endangered by global climate change. The politics of a thousand bureaucrats and a thousand swamp dwellers are eating away at the protected structures of U.S. industry.

Infrastructure talk is going in the right direction but I fear there is now no room in macro-economics for managing the economy. The economy is growing at 2 to 3 percent and unemployment is at a 17-year low. Interest rates are in line with growth rates and the stock market is booming so it would seem all is well. The problem is that none of these numbers is consistent with any mainstream macro-economic models.

It is time for Trump to move on infrastructure — that is, stimulate the economy because the Republican trickle-down plan won’t do it.

Paul A. Heise, of Mount Gretna, is a professor emeritus of economics at Lebanon Valley College and a former economist for the federal government.